IAA MWG Presentation

Current US Mortality Studies, Research, etc.

Cape Town 2016

Al Klein

Society of Actuaries

2015 VBT• Involved in development

• Best of three SOA VBT tables (level and slope), but not perfect

• Experience data from 2002-2009 plus MIMSA II and TOAMS III

• Ultimate mortality rate of 500 deaths per 1,000

• 10 NS and 4 SM RRTables for PBR

2017 CSO• Developed from 2015 VBT

• Loading percentage varied by attained age and was designed to provide sufficient margin for most companies

• To be used for CVRM, net premium reserves, non-forfeiture, cap for UL COI

• Preferred tables to be used for CRVM and net premium reserves

RRTool• RR stands for Relative Risk

• Designed to determine the industry table to be used for PBR

• Based on company credibility and underwriting criteria used for particular risk class

• Involved in development and can help you or clients with any questions on the tool

Report on 2015 VBT/2017 CSO Impact – Considerations for Life Insurance Products

• Done by Milliman (Andrew Boyer, Charlie Linn, Karen Rudolph)

• Analysis using data from participating companies to evaluate the impact of the 2017 VBT on reserves

Impact of VM-20 on Life Insurance Product Development

• Being done by Milliman (Paul Fedchak, Jackie Keating, Karen Rudolph, Uri Sobel, Andrew Steenman, Rob Stone

• Phase 1

• Provides iterations for moving from CRVM to reserve financing to VM-20 for term and ULSG products, 2001 CSO to 2017 CSO

Mortality & Other Implications of PBR (VM-20) Survey

• Done by SOA Mortality and Underwriting Survey Committee

• Survey conducted in 2014 and published in 2015

• Survey discusses resources, mortality assumption setting and modeling, and impact on product development

Predictive Analytics & Accelerated and Enhanced Underwriting Survey• SOA Mortality and U/w Survey Committee

• For PA, asked about marketing (8 questions), underwriting (6), and post-issue (7)

• Implemented? Working on and considering? Not working on and considering? Decided no?

• Survey conducted in 2016 and will be published in 2017

Mortality Improvement Rates for AG-38 for Year-End 2016

• Just released in September

• Completed by Mortality Improvement Life Working Group

• Developed as average of:• General population mortality improvement from last

10 years (2003-2012 for 2016) from Social Security Administration (SSA) and

• Mortality improvement from SSA Trustee’s Report intermediate assumption over 20 year period (2014-2034)

Mortality Improvement Scale MP-2016

• Just released in October

• Developed by Mortality Improvement Subcomm. of RPEC (Ret. Plans Exper. Comm.)

• Based on 2012-2014 SSA mortality data plus a slight modification to two input values to improve year over year stability

• Slight decrease in LE due to slower rate of improvement

Longevity Advisory Group

• Formed in 2014 based on recommendation from task force to better educate actuaries and the public on longevity issues

• Held invitee only seminar in Chicago early 2015 with experts from around the world

• Longevity webcast series

• Begun work to develop consistent framework for developing mortality improvement assumptions

Components of Historical Mortality Improvement

• Research project that has begun, the findings of which will be used to help develop the consistent framework for developing mortality improvement

• Results of findings will be published in 2017

Younger Issue Age Mortality Analysis Report

• ILES (Individual Life Experience Studies) and MIB (Medical Information Bureau), oversight by group from 2015 VBT

• Based on 2000-2013 experience

• Focused on issue ages 0-17

• Experience was studied by issue age, duration, attained age, gender, select period, policy size, product, preferred class and smoking status

Older Age Analysis Report

• Part of 2015 VBT development

• Discusses considerations, including:• Mortality patterns in 2002-2009 data

• Policy size

• Widow effect

• STOLI

1900 Birth Year Cohort

• Research project

• Goal is to help determine pattern of older age mortality

• Will actually look at five birth year cohorts

US Population Mortality Trends• Task Force looking for ways to quickly

publish mortality findings/trends based on quick research of recently released mortality data from various sources

• Considering reporting on flu and influenza first, sometime next year after the flu season and after the data comes in

Preferred Class Structure Report – Part 2

• SOA/MIB Report

• Purpose:• How are companies changing preferred structures?

• How does mortality vary by company?

• Study years 2009-2013, issue years 1990+

• Studied results by issue year, issue age, duration, gender, plan, and policy size

• Also looked at preferred class wear off

Level Premium Term Conversion Experience

• Research project completed by RGA

• Report on policyholder behavior and potential mortality implications

Group Term Life Mortality Study

• Study period 2010-2013

• Covers individually billed group basic life, supplemental and voluntary group life, ported group life; basic group AD&D, and supplemental and voluntary AD&D

Structured Settlement Mortality Experience Report

• Study period 2000-2008

• Covers experience on workers compensation, individual long term disability, and lawsuit settlements

• Includes standard and substandard annuities

HMD Mortality by State

• HMD is the Human Mortality Database

• One of two projects HMD is completing in return for funding from SOA

• One issue in this project is how to deal with inter-state movement

HMD Cause of Death

• Second project HMD is completing in return for funding

• Looking at COD data for eight countries (Canada, Czech Republic, England and Wales, France, Japan, Norway, Sweden, US)

• Two issues in this project deal with changes in ICD definitions over time and country specific cause of death nuances

Mortality: A Quest for the Ultimate

• Long Term Care News Article by Milliman (Missy Gordon and Shawn Stender)

• Trends in mortality on long term care business

SOA Annual Meeting Presentations• Mortality Trends: A Discussion of Disparate

Views

• Population Mortality Analysis and Methods

• Older Age and Juvenile Mortality Patterns

• One Thing Leads to Another, the Role of Chronic Disease in Higher Mortality Rates

• Longevity Reinsurance

• PBR – Credibility and Uw Criteria Scoring

SOA Life and Annuity Symposium Presentations

• Predictive Analytics for Mortality, Quality, and Fraud

• Older Age Mortality Analysis Using Modern Statistical Methods

• Mortality – What do Non-actuaries Focus on and Why Should Actuaries Care?

Other SOA 2016 Meetings with Mortality Topics

• Valuation Actuaries Symposium (August)

• Longevity 12 (September)

Living to 100 – Insights on the Challenges and Opportunities of Longevity• Literature review 2002-2014

• Highlight areas of consensus and disagreement

• Present techniques for modeling mortality and forecasting future mortality

• Commentary from actuarial interviews

• Facilitate content for broader audience

Other US Activities

Actuaries Longevity Illustrator• Joint SOA/Academy project

• Simple inputs – age, smoking status, general health

• Shows joint lives information on:• Probability of living to certain age

• Probability of living a certain number of years

• Number of years one or both will live based on certain probabilities

SSA OCACT

• Mortality data and projections from the Office of the Chief Actuary, SSA

Johns Hopkins and AIG• AIG funded research project with Johns

Hopkins

• Organized interviews by expertise (e.g., cardio, cancer, etc.)

• Asked each group for future projections of mortality based on their area of expertise

• Results varied by area, but were generally consistent with SSA mortality projections

The Drivers of Future Mortality: An Underwriter’s Perspective

• Research report by SCOR

• Covers past and future drivers

• Future drivers discussed focused on:• Medical advances

• Behavioral and lifestyle changes

• Infectious diseases

• Same title – Article in On the Risk (9/2015)

New Mexico Conference on Aging

• Sessions on wellness

• Support and ideas for active aging

AAA Longevity Risk Task Force• Goals

• Evaluate US and international practices for considering longevity risk in reserves and capital requirements for life and annuity products

• Create recommendation on explicit longevity risk margin

• Presented recommendation to Federal Reserve 9/2016, link:• https://www.actuary.org/files/publications/LRTFPrese

ntation_Fed_09.30.2016.pdf

Questions?